Judge Likes New Facebook Deal on Sponsored Stories

(CN) – Facebook users who said their names and likenesses were used for promotional purposes without permission can keep a $20 million settlement, a federal judge ruled. Angel Fraley led a class action against Facebook in March 2011 over a new feature called “Sponsored Stories.” The class, covering nearly 125 million users, alleged the site publicized their “likes” of advertisers without compensation or a way to opt out. The lawsuit over was removed from Santa Clara County Superior Court to the Northern District of California in April 2011. Facebook offered in August 2012 to settle the dispute by making a $10 million payment to Internet privacy organizations, but U.S. District Judge Richard Seeborg said the deal was not helpful to class members. The nixed deal would have given users more control over how their names and likenesses are used, and would pay class counsel fees of up to $10 million. In its next attempt, filed in October, Facebook said users could apply for a cash payment of up to $10 each, to be paid from a $20 million settlement fund. It would award remaining funds cy pres to court-approved nonprofits. Facebook also said it will implement “robust new disclosures and innovative controls” to remedy users’ privacy concerns, plus extend parental-control tools. Specifically, parents will be able to access minors’ advertising controls immediately after the parties confirm their relationship on the site. The revised settlement also gives Facebook the right to oppose requests for attorneys’ fees and expenses. “The revised settlement delivers substantial, immediate relief for the nearly 125 million users in the class,” Facebook said in a brief. “It provides improved disclosure, new and powerful user controls relating to sponsored content, and potentially millions in direct monetary payments. The revised settlement unquestionably meets the permissive standard for preliminary approval, which should be granted whenever a non-collusive settlement ‘falls within the range of possible approval.'” After reviewing evidence at a hearing last month, U.S. District Judge Richard Seeborg gave the settlement preliminary approval on Monday. “The settlement agreement appears to be the product of serious, informed, non-collusive negotiations and falls within the range of possible approval as fair, reasonable and adequate,” Seeborg wrote. Facebook called the revised settlement “fair, reasonable and adequate,” and added that it is a product of “fully-informed, arm’s-length, non-collusive negotiations.” Seeborg also appointed Garden City Group as settlement administrator and escrow agent. Class members must submit a claim form to the administrator to receive a share of the net settlement fund within 150 days of the preliminary approval order. All papers supporting plaintiffs’ request for attorneys’ fees and costs must be filed within 23 days of the order. Facebook may file an optional statement in support of the final approval of the settlement agreement no later than 14 days before the fairness hearing, to be held June 28.